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KUALA LUMPUR: Malaysia’s industrial production index (IPI) is expected to improve from September onwards on anticipation of an improved economic outlook, an economist said.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said higher output would be recorded as more economic activities are allowed to be reopened following the government’s decision to relax restrictions.

“The IPI outturn will hinge upon the extent of the reopening of the economy. Thus far, it has been quite constructive with the vaccination programme having proceeded extremely well and there are more states going into the next phase under the National Recovery Plan (NRP),” he told Bernama.

The IPI is a monthly economic indicator measuring real output and activity of industry sectors such as manufacturing, mining, and electricity.

Earlier today, the Department of Statistics Malaysia (DOSM) announced that the IPI fell 5.2 per cent year-on-year (y-o-y) in July 2021 – its first decline since November 2020 – due to the decrease in manufacturing index and electricity indices.

Mohd Afzanizam said the decline in IPI reflected manufacturers’ sentiments, with Malaysia’s manufacturing purchasing managers’ index (PMI) hovering at 40.1 points in July from 39.9 points in the preceding month.

The PMI index also remained below the 50 points demarcation line when the index came in at 43.4 points in August, he noted.

“This means that manufacturers have been very pessimistic given the resurgence of COVID-19 new cases, which has led to restrictive human mobility and limited operational capacity,” he explained.

DOSM also announced that Malaysia’s manufacturing sales in July 2021 grew a marginal 0.6 per cent y-o-y to RM119.8 billion.

Compared to June, the sales value decreased by 3.6 per cent. – Bernama

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